| Don't be caught without a form of income, make | | | | non-occupational disability. On the the hand, |
| sure you get paid! If you get injured, be prepared! | | | | long-term policies cover both occupational and |
| Some things to consider when determining | | | | non-occupational sickness and accidents. At this |
| disability income needs are | | | | point if the worst does happen, and you are |
| - Establish the absolute minimum required if | | | | totally disabled, occupational benefits are routinely |
| income stops. | | | | reduced because you may qualify for benefits |
| - Determine your retirement needs if work | | | | form workers compensation and social security. |
| ceases and the ability to pay into your retirement | | | | Other considerations are the provisional period, |
| ends. | | | | elimination period and the benefit period. Some |
| - Allow for any benefit that might be offset by | | | | disability policies use a probationary period that |
| social security | | | | begins when a policy goes into effect and no |
| - and workers compensation. | | | | benefits are paid during this period. It varies but is |
| Some thought needs to be afforded to the | | | | often 15 or 30 days and sometimes up to 60 |
| possibility of "total disability." Watch out here too... | | | | days for long-term policies. |
| Definition are important! Policies and different | | | | In addition to the probationary period some |
| companies may use different definitions for "total | | | | policies also include an elimination period. It begins |
| disability." | | | | when the policy goes into effect and can last for |
| Some policies will NOT cover you if you get | | | | any length of time even up to a full year. This is |
| injured doing something that they deem "to | | | | usually left to the insured to decide as it is based |
| dangerous" (i.e. skydiving or race car driving). Also, | | | | on how long the insured can go without income |
| some interpretation is important as far as to the | | | | after becoming disabled. |
| insured's own occupation and any occupation the | | | | The primary advantage to a long probationary |
| insured may be qualified to perform. | | | | period is a low premium and allows the insured to |
| There are three methods used to determine | | | | use premium dollars to purchase a benefit that |
| "total disability", these are | | | | best suits their needs. |
| 1. Predefined Occupational Method (Based on | | | | The benefit period, which is the length of time, |
| Insured's Own Occupation) | | | | can vary depending on the needs of the insured. |
| 2. Reasonably Qualified Occupational Method | | | | They can be as short-term as 13 weeks up to |
| (Based on Insured's Experience, Education and/or | | | | long-term as long as age 65. |
| Training) | | | | As a general rule the longer the benefit period, |
| 3. Presumptive Disability (Loss of limbs, sight etc...) | | | | the higher the premium. Same as everything in |
| Pre-Defined Occupational Method - This method | | | | life, we get what we pay for. Benefit amounts |
| concerns the occupation that the insured is | | | | for both short-term and long-term policies range |
| normally engaged in. In this case total disability | | | | from 50% to 66 2/3% of earnings with a cap on |
| might be defined as "the insured's inability to | | | | the maximum amount to be paid. |
| perform any or all of the duties or his or her own | | | | Other disability categories are confining vs. |
| occupation." This is determined by the insured's | | | | non-confining, partial, residual, recurrent, delayed, |
| occupation at the time that disability begins. | | | | combined accident and sickness and non-disabling. |
| Reasonably Qualified Occupational Method - This | | | | We won't cover definitions of each category |
| method is more limiting defined as "the insured's | | | | here, but do be aware of their existence and |
| inability to perform the duties of any occupation | | | | check your policy for a definition of coverage for |
| for which he or she is reasonably qualified by | | | | these types of disability. |
| education, training or experience." | | | | Most companies offer optional short-term benefits |
| In other words, while you may no longer be able | | | | for an additional cost. A typical disability income |
| to conduct the tasks of your current occupation | | | | policy might include all, some or none of the items |
| you may be able to perform activities in the | | | | below so it is important to discuss these with |
| associated field. | | | | your agent. |
| There are some disability income policies that use | | | | These options are:o Supplemental income - |
| another criterion to classify total disability. This is | | | | sometimes called an additional monthly benefit |
| called presumptive disability and automatically | | | | rider, provides additional income during the first |
| qualifies the insured for total disability classification. | | | | several months of a long-term disability.o Hospital |
| These conditions are:o Loss of use of any two | | | | income - pays a stipulated amount per day when |
| limbso Total and permanent blindnesso Loss of | | | | hospitalized extending for a certain period and can |
| speech and hearing | | | | be up to 12 months.o Elective benefits or |
| Presumptive Disability - This method sometimes | | | | indemnities - provides lump-sum payments for |
| involves a loss of income test. If the earnings | | | | certain injuries like fractures, dislocations, sprains |
| after disability significantly drop below pre-disability | | | | or amputations of toes or fingers and is elected |
| earnings by a given percentage the insured may | | | | by the insured in lieu of weekly or monthly |
| be considered totally disabled. | | | | benefits stated in a contract. |
| As a rule of thumb, a short-term policies cover | | | | |